After an ugly run in September and October, stocks have gotten a bit of spring back in their step since Halloween. After a steady rise, the Nasdaq is up about 10% this month and the S&P 500 is up about 9% or so.
[Sign up for stock news with our Invested newsletter.]
But with volatility the name of the game lately, many investors are still approaching Wall Street with trepidation. These folks are thinking less about chasing small-cap tech stocks and more about how to get defensive as we close out a choppy 2023, and how to ensure their money is safe as they look ahead to the New Year.
If this characterizes your mindset right now, consumer staples ETFs can help. These funds are among the most popular low-risk investments out there as they rely on steady sales of modestly priced items like packaged foods or household products rather than discretionary expenses or big-ticket purchases.
The following seven ETFs are the best consumer staples ETFs to consider now if you’re interested in taking a more defensive approach.
| ETF | Expense ratio |
| Consumer Staples Select Sector SPDR Fund (ticker: XLP) | 0.10% |
| Vanguard Consumer Staples ETF (VDC) | 0.10% |
| iShares US Consumer Staples ETF (IYK) | 0.40% |
| Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) | 0.40% |
| iShares Global Consumer Staples ETF (KXI) | 0.41% |
| First Trust Consumer Staples AlphaDEX Fund (FXG) | 0.63% |
| Invesco Food & Beverage ETF (PBJ) | 0.57% |
Consumer Staples Select Sector SPDR Fund (XLP)
This consumer staples ETF is the leading fund in the sector as measured by assets under management, with an impressive $15.5 billion under its belt. That makes it the most established and liquid option, and a great place for investors to start if they are interested in this sector. But while it is the runaway leader based on size, it’s not particularly sophisticated. XLP simply takes all the consumer staples stocks that are large enough to be part of the S&P 500. That’s less than 40 total stocks at present, but includes big-name firms like personal care giant Procter & Gamble Co. (PG) and warehouse retailer Costco Wholesale Corp. (COST).
Vanguard Consumer Staples ETF (VDC)
Though it technically has less than half the assets of the prior option, VDC is still well-established as a $6 billion fund that has wide appeal among investors interested in consumer staples ETFs. It offers a wider array of components, too, with more than 100 different constituent stocks. About half of the assets are still allocated in megacap consumer staples firms that are each individually valued at more than $30 billion in assets, however. You’ll definitely get a smattering of small stocks in there, but it’s still the old favorites like Coca-Cola Co. (KO) or Walmart Inc. (WMT) that are pulling most of the weight.
iShares US Consumer Staples ETF (IYK)
Another $1 billion-plus consumer staples ETF, this iShares option has many of the same holdings as the prior funds across its total portfolio of just under 60 positions. It’s also top-heavy in big names like P&G and Coke thanks to weighting based on market capitalization, too. Part of the reason it’s smaller than the prior sister funds is because its expense ratio of 0.40% is significantly higher than the 0.10% charged by both the VDC fund from Vanguard or the XLP fund from SPDR. But if your broker offers certain incentives to trade iShares funds vs. the alternative, it may still be worth a look.
[See: 7 Best High-Dividend Mutual Funds.]
Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS)
The prior funds, as well as other leading look-alike consumer staples ETFs, definitely give you exposure to the big companies in the space. However, the largest options are all weighted by size — meaning the big firms represent more of the portfolio and make the ETF quite top-heavy. For instance, XLP has more than a third of its assets in its top three positions alone. RSPS takes an “equal-weight” approach to the consumer staples stocks in the S&P 500, with each of the roughly 40 positions at between 2% and 3% weighting. It also rebalances regularly to ensure that allocation corrects itself and doesn’t allow for a big winner or loser to skew the overall portfolio. The fund is only $530 million or so in total assets, but this more diversified approach to consumer staples stocks makes it worth a look.
iShares Global Consumer Staples ETF (KXI)
For investors who want a truly global approach to consumer staples stocks, this nearly $900 million ETF offers a portfolio that is not limited to domestic corporations. You’ll still get U.S. firms Coke and P&G, but you’ll also get Switzerland-based consumer giant Nestle SA (NSRGY) and the U.K.’s Unilever PLC (UL). These are big brands that make many products that Americans put in their grocery carts, as well as foreign consumers around the world, so you’re not getting stuck with no-name firms here. And with about 60% of assets in U.S. stocks, you’re still getting a toehold in the popular local names the other consumer staples ETFs also offer.
First Trust Consumer Staples AlphaDEX Fund (FXG)
At around $500 million in total assets, FXG is small but still big and established enough to consider as one of the best consumer staples ETFs to buy now. Unlike the prior funds, this First Trust offering is an “enhanced” index. The 40 staples stocks that make the cut here are selected based on factors including price appreciation trends, growth metrics like revenue expansion and value metrics like price-to-book ratio. The fund is regularly reconstituted to focus on what the screening methodology identifies as the best opportunities, but right now top positions include foodservice company Performance Food Group Inc. (PFGC) and mid-sized convenience store retailer Casey’s General Stores Inc. (CASY)
Invesco Food & Beverage ETF (PBJ)
A smaller fund with only $180 million in assets, this Invesco consumer staples ETF with the clever ticker is a direct play on some of the food and beverage companies mentioned in previous options. It excludes retailers, tobacco and some of the other less obvious firms that are technically in the sector. Particularly as some investors are focused on the impact of inflation or the ability of premium staples brands to raise prices and defend profits in a way that some retailers cannot, PBJ is a good alternative. Just be aware that the portfolio is small at just 30 stocks as well as the total assets being on the lower side.
More from U.S. News
7 Best International Stock Funds to Buy
What’s the Best Treasury ETF? 7 Options for Investors
7 Best Consumer Staples ETFs originally appeared on usnews.com
Update 11/17/23: This story was previously published at an earlier date and has been updated with new information.
